A splash of sunshine and a hint on thermal

For those concerned about the issues of clean air and sustainability, there were four things of interest in Finance Minister Nirmala Sitharaman’s Budget. The announcements were, however, incremental in na­ture, rather than path-breaking.

Solar power: The recently-launched solar pump scheme is set to be ex­panded. The government aims to provide two million farmers (1.75 million earlier) with subsidised standalone solar pumps, help another 1.5 million (1 million earlier) to solarise their grid-connected pump sets, and set up solar plants on barren land under KUSUM scheme. The targeted installation of 25,750 megawatts by 2022 under the original plan would also be increased, though no new number has been announced. 

A proposal to set up “large solar power capacity” along railway tracks on land owned by Indian Railways is also under consideration. 

Thermal power: The finance minister acknowledged that there are “thermal power plants that are old and their carbon emission levels are high.” 

The action proposed is, however, tentative: "For such power plants, we propose that utilities running them would be advised to close them, if their emission is above the pre-set norms. The land so vacated can be put to alternative use,” she said.

Clean air: Mention of clean air in the Budget indicates that some sort of priority is accorded to it. As cities roll out their clean air plans, minister Sitharaman announced that Rs 44 billion ($616 million) would be set aside to encourage them in 2020-21. 

By comparison, a new National Mission on Quantum Technologies and Applications was allocated Rs 80 billion ($1.1 billion) over a five-year period.

Electric vehicles: To en­courage domestic value addition, customs duty has been in­creased by varying degrees on completely knocked-down, se­mi-knocked-down and comple­tely built units of buses, trucks, two-wheelers, three-wheelers and passenger cars. 

There were other announcements that could prove positive for the renewable energy sector. Sovereign wealth funds will now enjoy 100 per cent tax exemption on their in­terest, dividend and capital ga­ins income for investments ma­de in infrastructure and other specified sectors before March 31, 2024. The renewable energy sector has been of particular interest to these funds, with recent commitments from the likes of Abu Dhabi Investment Authority and UAE’s Mubadala Inve­stment Company. 

The new concessional corporate tax rate of 15 per cent — available to new manufacturing domestic companies set up on or after October 1, 2019 — is now extended to the business of electricity generation. This will also be a plus for renewable energy companies.

The decision to move to prepaid smart electricity meters for all consumers in the next three years — if it happens — would help the distressed distribution companies, and in turn, the renewable energy companies.

The author is editor,  global policy, BloombergNEF vgombar@bloomberg.net